Keystone XL: Job Prospects Likely to Override Environmental Concerns

CUSHING, OK - MARCH 22: U.S. President Barack Obama speaks at the southern site of the Keystone XL pipeline on March 22, 2012 in Cushing, Oklahoma. Obama is pressing federal agencies to expedite the section of the Keystone XL pipeline between Oklahoma and the Gulf Coast. (Photo by Tom Pennington/Getty Images)

TransCanada’s four-and- a-half year wait for a presidential permit to build the Keystone XL Pipeline should soon be over.

By this autumn, President Obama is expected to make a decision on whether construction of the 1,900 km pipeline from Alberta to Nebraska – where it will connect to an existing pipeline that leads to refineries on the Gulf Coast – will be allowed to proceed.

The window for public comment on the U.S. State Department’s Draft Supplemental Environmental Impact Statement (SEIS) is closed and the stage is set for a final SEIS.

The $5.4 billion pipeline has been controversial since it was first proposed in 2008.

Supporters argue it will bring jobs and conflict-free oil to the U.S., while opponents say it will lead to unacceptably high greenhouse gas emissions from Alberta’s oil sands and threaten human health and water supplies.

A key message from the state department’s draft report is that the proposed pipeline, though it would add 830,000 barrels of oil per day to supply at full capacity, will not have an impact on global emissions of greenhouse gases because producers will simply find alternatives routes to market if Keystone XL is rejected.

There have been three significant developments since Obama turned down TransCanada’s first proposal in 2011:

TransCanada has altered the route to avoid the environmentally sensitive Nebraska Sandhills, receiving the blessing of the Governor of Nebraska as a result.

The Democrats are looking to wrest control of the House Of Representatives from the Republicans in the 2014 midterm elections, partly by appealing to Midwestern blue collar workers seeking employment.

Increasing production of shale oil in North Dakota and elsewhere in the U.S. is reducing the demand for the heavy crude from Alberta’s oil sands.

Keystone XL: The Pros

An estimated 15,200 direct jobs (13,000 in the U.S. and 2,200 in Canada, mostly during the construction phase), plus another 7,000 indirect jobs in manufacturing the pipes and fittings.

Potential for billions of dollars in export and GDP growth in Canada.

$5 billion per year in property taxes over the life of the project.

Reduction in U.S. dependence on oil from Venezuela and the Middle East.

Keystone XL: The Cons

An extra 27 million tonnes of greenhouse gases entering the atmosphere every year compared with conventional oil (though some argue that production in the oil sands will increase with or without the pipeline).

The potential to damage human health, pollute land and water, and disrupt of the habitats of endangered species, particularly if the line is damaged or fails.

Most of the jobs created will be temporary, not permanent.

Majority of Americans disagree with activists

Former U.S. vice-president Al Gore recently told The Globe and Mail that Canada is damaging relations with the U.S. by supporting the pipeline and oil sands development and “adding to the reckless spewing of pollution into the Earth’s atmosphere as if it’s an open sewer.”

But a recent poll by the Pew Research Center indicates that despite vocal protests against the pipeline, including arrests of high profile activists and celebrities outside the White House, most Americans support the pipeline. The poll surveyed 1,500 Americans by phone and found that 66% of them are in favour of building the pipeline while only 23% oppose the project.

In the end, it may come down to politics

With mid-term elections approaching in 2014, Obama cannot afford to squander an opportunity to gain control of the House of Representatives. Winning over blue collar voters in the Midwest will help him do that.

The promise of thousands of jobs after a long and brutal recession, even if they are temporary, is a powerful carrot. As Obama said in recent speech to Democrats in San Francisco:

“If you haven’t seen a raise in a decade. If your house is still $25,000, $30,000 underwater. If you’re just happy that you’ve still got that factory job that is powered by cheap energy … you may be concerned about the temperature of the planet. But it’s probably not rising to your number-one concern.”

Virginia Heffernan is a former geologist who writes about mineral exploration and mine finance. She draws upon her formal education and visits to projects in North America, Central America, South America, China and Africa to provide unique insights into the sector.

Virginia Heffernan is a former geologist who writes about mineral exploration and mine finance. She draws upon her formal education and visits to projects in North America, Central America, South America, China and Africa to provide unique insights into the sector. Connect with Virginia on LinkedIn or get in touch at heffernan@geopen.com.